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Housing Prices Still Favor Heartland America

Written by Gary North on February 14, 2012

The Federal Reserve Bank of Cleveland has published a pair of charts that sow where housing costs have risen nationally.

There is little doubt that the heartland missed out on the big bubble of the 2001-2006 period. It still retains an advantage over the coastal regions. The losses in the coastal regions have been substantial.

For young families, there is no doubt that remaining in California or Boston is a bad idea. They will be burdened with massive housing debts for decades. If they lose their jobs, they are trapped. But rental costs are high.

The debt patterns of their parents ran up housing costs in the boom areas. Now the parents face falling prices. Yet they draw closer to retirement.

The first chart relates to how much space you get for your money. You can see the hits taken by home owners, city by city. Californians have paid a huge price.

The second chart shows what has happened over the last four years in the Heartland states of the Cleveland Federal Reserve. There have been losses, but nothing compared to most regions.

For younger families with high-tech skills, a move to lower-cost areas offers far greater career mobility, because they do not have to indebt themselves so heavily in the early years.

For real estate speculation, it’s far better to be in this region than the coastal regions. Of course, Texas and (now) Florida offer major opportunities. There will be growth in population, yet housing prices are relatively low. This combination is ideal.

Continue Reading on www.clevelandfed.org

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